IRS Issues Guidance on Interest Deduction, and It’s Good News for P3 Projects

Last year’s Tax Cuts & Jobs Act (“TCJA”) left open the possibility that a full tax deduction for interest on debt could be in jeopardy. But the IRS recently finalized its guidance, and it preserves a safe harbor for contractors and investors in P3s to deduct the interest. The upside, of course, is that an elimination of this deduction would have made it that much more challenging to get P3 deals done. In the following article, tax lawyer Douglas Schwartz from the law firm Nossaman, LLP in Los Angeles, provides additional commentary on the impact of this IRS guidance.